June 16, 2021

The European Justice endorses the Spanish fund of 10,000 million in public aid for companies hit by the pandemic



The European Justice has endorsed this Wednesday Spain’s public aid to companies hit by the COVID-19 crisis, through a ruling that comes to support the fund to support the solvency of strategic Spanish companies in temporary difficulties due to the pandemic, intended for recapitalization operations and endowed with a budget of 10 billion euros until June 30, 2021.

Through this fund, linked to SEPI (Sociedad Estatal de Participaciones Industriales) and denounced by Ryanair, Spain contributed 475 million to Air Europa; 53 million to Plus Ultra; and has pending approval of 103 million for Air Nostrum.

The Luxembourg-based court understands that it is a measure compatible with the provisions approved by the European Commission in times of pandemic, which allow aid intended to remedy a serious disturbance in the economy of a Member State may be considered, under certain conditions , compatible with the internal market.

The TGUE ruling comes after a complaint from Ryanair. The company filed an appeal requesting the annulment of said decision by the Spanish Government. However, the General Court confirms that “the objective of the contested scheme satisfies the requirements” and that “the modalities for granting this aid do not go beyond what is necessary to achieve that objective. In this way, the referred scheme does not violate the principle of non-discrimination “.

The court also understands that Ryanair has not “demonstrated, in any case, in what way the exclusion of access to the recapitalization measures established through the contested regime could dissuade it from establishing itself in Spain or from providing services from Spain and destined for this country”.

Furthermore, the General Court “rejects the reason according to which the European Commission failed to comply with its obligation to weigh the positive effects of the aid with its negative effects on the conditions of trade and on the maintenance of undistorted competition”, and understands that “In the circumstances of the present case, that weighting would have no reason to be, since it is presumed that its result is positive”.

Ultimately, the judges conclude that the “European Commission was able to classify the aid in question as an aid scheme without incurring an error of law”.

Rejection of the Netherlands and Portugal

In parallel, the Luxembourg-based court has ruled in favor of Ryanair in two judgments related to cases of public aid in the Netherlands and Portugal and has annulled for not having insufficiently motivated the decisions of the European Commission that endorsed aid to airlines TAP and KLM.

However, the European Justice suspends the effects of the judgments, including the recovery of the aid, while waiting for the European Commission to issue a new decision.

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